On a stinking-hot morning in November 2025, a fitter named Deb clocked off her final shift at BHP Mitsubishi Alliance's Saraji South mine, one of roughly 750 Bowen Basin coal jobs the company cut that year as it mothballed the pit near Dysart. Her severance letter cited "softened coking coal prices and unsustainable royalty burdens." A few hundred kilometres south in Brisbane, the same industry's export earnings had, only three years earlier, handed the Queensland government the largest royalty windfall in the state's history — more than $15 billion in a single year, enough to help fund a record operating surplus, cost-of-living rebates and a run of infrastructure spending. Both things are true at once: coal has made Queensland's budget look flush, and it is now also shedding the jobs that generate the revenue. The tension between the two is the story of the state's coal royalty regime.
What the government did
Queensland has taxed coal production through royalties for decades, calculated as a share of the value of coal sold. From 2012 until 30 June 2022, the rate structure was frozen at three tiers — 7% on coal priced up to $100 a tonne, 12.5% between $100 and $150, and a flat 15% on everything above $150 — no matter how far prices ran past that ceiling (Mineral Resources Regulation 2013 (Qld); Queensland Treasury, Budget Strategy and Outlook 2022-23). That freeze coincided with an extraordinary run-up in global coal prices through 2021-22, driven by the post-pandemic energy rebound and Russia's invasion of Ukraine, which pushed benchmark coking and thermal coal prices to multi-decade highs. Under a frozen 15% top rate, Queensland captured a shrinking share of that windfall the higher prices climbed; coal companies captured the rest.
Then-Treasurer Cameron Dick used the 2022-23 Budget, handed down on 21 June 2022, to end the freeze. Three new tiers took effect from 1 July 2022: 20% on coal priced above $175 a tonne, 30% above $225, and 40% above $300 — announced without the consultation the resources sector says had previously been standard practice for royalty changes (Queensland Government, Ministerial Media Statement, 21 June 2022). The government did not need to legislate the change through Parliament: because coal royalty rates sit in a regulation rather than the parent Act, the increase could be, and was, made by regulation alone.
The Palaszczuk and Miles Labor governments then entrenched what they had built. In September 2024, weeks before that year's state election, the Miles government passed the Progressive Coal Royalties Protection (Keep Them in the Bank) Bill 2024, which bars a future government from lowering coal royalty rates by regulation alone — any cut now needs a vote of the full Parliament. The Crisafulli LNP, which won government at the October 2024 election, inherited that structure rather than designing it. But it has not tried to unwind it. Crisafulli told a Queensland Resources Council audience before the election that the tiers were something the industry "could take to the bank," and his government has since told the sector not to expect any change before the decade is out. That is a choice the Crisafulli government owns: keeping a Labor-designed, Labor-protected revenue stream because its own budget now depends on it just as much as its predecessor's did.
The strongest case
Queenslanders own the resource, and coal companies were paying historically low rates on historically high prices
The government's justification deserves to be taken on its own terms. Queensland's coal deposits are a public asset under the Mineral Resources Act 1989 (Qld) — the state, on behalf of Queenslanders, is legally the resource's owner, and a royalty is the price companies pay to extract and sell what belongs to the public rather than to them. For a decade before 2022, that price was fixed even as coal prices in 2021-22 roughly tripled from pre-pandemic levels on the back of a global energy crisis that had nothing to do with any Queensland mining company's own investment or risk-taking. Under the frozen 15% top rate, an ever-larger share of a genuinely extraordinary windfall was flowing straight through the state and into company profits, most of them ultimately held overseas. Raising the rate only on the portion of price above $175, $225 and $300 a tonne left industry returns on every dollar of coal sold at ordinary prices untouched; it captured a larger public share only of gains the state judged to be windfall, not baseline, profits. Treasurer Dick's framing at the time — a "fair and reasonable" response — reflects a defensible principle applied by resource-owning governments worldwide: when a commodity price spikes for reasons outside a company's own effort, the public owner of the resource is entitled to negotiate a larger share of that spike, not simply watch it accrue entirely to the seller.
The evidence
The scale of the shift is visible in the primary fiscal record. Coal royalty revenue reached approximately $15.3 billion in 2022-23, by far the largest haul in Queensland's history (Queensland Treasury, Report on State Finances 2022-23; Queensland Budget Papers). That single year of royalties helped deliver a record $13.93 billion operating surplus, the largest cash result Queensland's budget had ever posted (Queensland Government, Ministerial Media Statement, June 2024). It did not last. As benchmark coal prices retreated from their 2022 peaks, royalty revenue fell to around $10.5 billion in 2023-24, and the state's operating surplus collapsed in step, down to just $564 million — a swing of more than $13 billion in the bottom line in a single year, driven substantially by the same commodity that had produced the record surplus twelve months earlier (Queensland Treasury, Report on State Finances 2023-24; Ministerial Media Statement, June 2024).
The decline continued. The Queensland Budget handed down in June 2025 forecast coal royalty revenue of only around $4.8 billion for 2025-26 — less than a third of the 2022-23 peak — as coal export values fell further, down by roughly 25% (about $13.4 billion) across 2025 on the analysis of the energy finance research group Climate Energy Finance (labelled secondary source). Coal royalties were then forecast to recover to about $6.9 billion in 2026-27, as production rebounded from weather disruptions earlier in 2025-26 and coal and gas prices firmed again — but that recovery still leaves royalty revenue well under half its 2022-23 high, in a Budget (delivered 23 June 2026 by Treasurer David Janetzki) that itself now forecasts a $6.2 billion operating deficit for 2026-27, and a further deficit of a similar size the year after, with no return to surplus pencilled in before 2029-30 (Queensland Treasury, Budget Strategy and Outlook 2026-27).
The critique
None of that fair-return case answers a separate question: whether it is sound fiscal management to build a state budget's spending base on a revenue line this volatile. Coal royalties are not like payroll tax or stamp duty, which track the size of the economy in a relatively smooth way. They are the product of two variables Queensland's government does not control — a global commodity price set by demand in China, India and Japan, and export volumes that depend on mine output and weather half a world away from the Treasury officials trying to forecast it. The results show up in the numbers: a swing of more than $13 billion in the operating balance between one financial year and the next is not the mark of a resilient revenue base. It is the mark of a budget that got extraordinarily lucky in 2022-23 and has been adjusting to the comedown ever since.
The industry's own criticism of the regime, while self-interested, is not without substance and deserves a fair hearing rather than dismissal. The Queensland Resources Council argues the state now runs the highest coal royalty burden in the world, and that combined royalty and company tax can strip more than half — in some cases, the QRC says, as much as 67% — of a mine's returns in years when prices reach the top tiers (Queensland Resources Council analysis, labelled industry source). BHP has separately warned that abrupt, uncompensated changes to royalty settings raise "sovereign risk" concerns for long-term capital allocation. Independent analysts dispute how much weight to put on those figures — the energy finance research group IEEFA has argued industry claims about effective royalty rates "don't add up" once standard deductions are accounted for — but the underlying industry decisions are not in dispute: BMA cut about 750 jobs and mothballed its Saraji South mine near Dysart from November 2025, and Anglo American cut a further 200-plus roles the same year, with both companies citing softened coking coal prices and the royalty burden together, alongside sector-wide operating costs the QRC estimates have risen by around 29% since 2022. Whichever share of that is royalties and whichever is the coal price itself, a government leaning this heavily on one industry's tax receipts has a direct fiscal stake in that industry's health, which sits uneasily against a royalty structure the industry itself says is accelerating its decline.
Queensland's budget went from a record $13.93 billion surplus to a forecast $6.2 billion deficit in four years, on a revenue line the government has now promised, by law, never to cut.
There is a second, less visible cost to leaning this heavily on royalties. Under the Commonwealth Grants Commission's GST equalisation process, a state that raises more revenue from its own resource base has its GST share reduced to offset that added capacity, so a meaningful share of any given year's extra coal royalties is effectively redirected back into the pool shared with other states rather than staying fully available to Queensland's own budget — the precise dollar cost is disputed and depends on assumptions the Commission does not fully publish, but the direction of the effect is not. And even with several billion dollars a year still flowing from coal royalties, the pattern in the 2026-27 Budget makes the underlying point starkest of all: a $6.2 billion forecast operating deficit, in a year royalty revenue is itself forecast to recover to around $6.9 billion, shows a spending base that has outgrown what even a reasonably good year for coal can now fund.
The risk to the future
A budget built on a commodity in structural, not just cyclical, decline
The volatility Queensland has lived through since 2022 is partly a cyclical story — coal prices spiked, then fell back toward historical norms, and may firm again for a time. But underneath that cycle sits a slower, structural one: global demand for thermal coal is widely projected to plateau and then decline over coming decades as major importers such as China, Japan and South Korea build out renewable and gas-fired capacity, and several of Queensland's own major trading partners have set net-zero targets that assume falling coal demand within the operating life of mines working the Bowen Basin today. Metallurgical (coking) coal used in steelmaking faces a less certain but still real long-term risk from emerging low-emissions steelmaking technologies. Neither trend is a decision the Queensland government makes; both will shape the price and volume sides of the royalty equation regardless of who holds office in Brisbane.
That leaves the Crisafulli government, and whoever follows it, managing a budget that has locked in higher recurrent spending off the back of a 2022 windfall, locked in by statute the royalty rates that produced it, and not yet built any comparable mechanism to smooth the revenue swings the past four years have shown are now closer to the norm than the exception. A state that keeps treating a cyclical high as the baseline for ongoing spending, on a commodity most of its own trading partners plan to buy less of within a generation, is building a harder budget repair job for later rather than a more resilient one now.